Green Energy or Libraries and Parks?

Today’s hot topic in both the LA Daily News and the LA Times is the financial battle between the City of Los Angeles and the Department of Water and Power. The City is about to go broke, and it expects DWP to bail it out. But the story is far more complicated.
Each paper has its lead editorial and at least one major story devoted to this topic today. Mayor Antonio Villaraigosa’s proposal to close city services such as parks, libraries, and public works for two days each week is the cause of today’s extra attention in the papers. These partial closures are his plan to address the pending budget shortfall, which he contends is the fault of the City Council. The Council blames the Mayor – and the DWP! How did the DWP get involved in this?
It seems the City has long treated DWP as an ATM machine, extracting millions of dollars from the purchasers of water and power to pay for other city services. The Times editorial provides one view of how DWP gets involved: http://www.latimes.com/news/opinion/editorials/la-ed-dwp7-2010apr07,0,3725401.story The editorial states that, “As a municipally owned utility, it makes the (financial) transfers in lieu of the taxes that privately owned utilities must pay to the state or the dividends they must pay their investors.” So let me get this straight: the Times believes that a City-run utility is entitled to charge the same as a private company for the same services. Then why should any city own a utility? In the Times’ world, there is no benefit to the rate payer – only the city benefits, by charging far more for the service than it costs them to provide it. And besides the rate payers, we have two other big losers: the State and Federal government, who miss out on significant taxes of the otherwise private utility. This is a sweet deal for the City of Los Angeles.
DWP operates almost entirely as an entity separate from the City. It even has its own board of directors; however, each director is appointed by the Mayor, so it’s easy to assume that the DWP board is really doing what the Mayor wants. And recently, the Mayor wanted a rate increase of 0.8 cents per kilowatt-hour. His DWP board approved it, but it also needed Council approval. The Council denied the increase, but authorized a 0.6 cent increase. DWP countered with a 0.7 cent increase, which the Council denied. Then DWP decided it would not transfer funds to the City, as per the decades-long arrangement. So now the Mayor threatens to shut down parks and libraries in obvious retaliation.
And why was any rate increase necessary? Simply to make LA a “greener” city – which, in turn, makes the Mayor a more viable candidate for a better political position, such as California Governor (see my blog of March 17.) It seems that no price is too high when it comes to furthering Villaraigosa’s insatiable quest for power.
Personally, I wish we had adults running the second largest city in the country, and the largest municipally-owned utility in the world.
Although not connected directly to this saga, there is a related issue that will be coming before California voters soon: an initiative that would require a two-thirds vote of the citizens of a city to authorize the conversion of a private utility into a municipal one. LA’s internal squabble can only help the promoters of this initiative – it looks like “Exhibit A” to me!

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